Closing Time: 6 Steps Every Homebuyer Should Expect

Your long home-buying journey is almost over. You found the home you
love, the seller agreed to your offer and now it’s time for closing. Of
course, there’s a lot to think about right now, and the last thing you
want is something­ to go wrong. So make sure you work with an
experienced closing agent to help ensure the details come together and
everything runs smoothly.

As soon as the seller accepts your offer, the behind-the-scenes work
begins. You can expect closing to happen within 30 to 90 days.

1. Select a Closing Agent

If you are working with a real estate agent, with your permission, he
or she may place an order with a closing agent as soon as your sales
contract is accepted. The closing agent can be a title company, an
escrow company or a settlement company.

Most homebuyers rely on their real estate agent to select a closing
agent—someone they work with regularly and know to be professional,
reliable and efficient. However, you can choose your own closing agent
if you wish. The closing agent will oversee the closing process and make
sure everything happens in the right order and on time, without
unnecessary delays or glitches.

2. Draw up an Escrow Agreement

First, a contract or escrow agreement is drafted, which the closing
agent reviews for completeness and accuracy. The agent will also put
your deposit into an escrow account, where the funds will remain until
closing.

3. Title Search is Conducted

Once the title order is placed, the title company conducts a search
of the public records. This should identify any issues with the title
such as liens against the property, utility easements, and so on. If a
problem is discovered, most often the title professional will take care
of it without you even knowing about it. After the title search is
complete, the title company can provide a title insurance policy.

4. Shop for Title Insurance

There are two kinds of title insurance coverage: a Lender’s policy,
which covers the lender for the amount of the mortgage loan; and an
Owner’s policy, which covers the homebuyer for the amount of the
purchase price. If you are obtaining a loan, the bank or lender will
typically require that you purchase a Lender’s policy. However, it only
protects the lender.

It is always recommended that you obtain an Owner’s policy to protect
your investment. The party that pays for the Owner’s policy varies from
state to state, so ask your settlement agent for guidance before
closing.

5. Obtain a Closing Disclosure

Your lender must provide a Closing Disclosure to you at least three
days prior to closing. Your lender may also have a closing agent provide
the Closing Disclosure to you three days before you close your
transaction.

If you or your lender makes certain significant changes between the
time the Closing Disclosure form is given to you and the closing, you
must be provided a new form and an additional three-business-day waiting
period after receipt of the new form. This applies if the creditor:

Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)

Changes the loan product

Adds a prepayment penalty to the loan

If the changes are less significant, they can be disclosed on a
revised Closing Disclosure form provided to you at or before closing,
without delaying the closing.

6. The Finish Line: Prepare for Closing

As closing day approaches, the closing agent orders any updated
information that may be required. Once the closing agent confirms with
the lender and the seller, he or she will set a final date, time and
location of the closing.

On closing day, all of the behind-the-scenes work is complete. While
you’ve been busy packing, ordering utilities and coordinating the
movers, your closing agent has been managing the closing process so that
you can rest assured, knowing all the paperwork is in order.